Vector auto Regressive Model PDF
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Added on 2020-01-28
Vector auto Regressive Model PDF
Added on 2020-01-28
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The Financial Crisis and Spain,How European monetary policyaffected their recovery
TABLE OF CONTENTSResearch introduction and overview................................................................................................3Research type..............................................................................................................................3Research approach......................................................................................................................4Data collection method...............................................................................................................4Data analysis ...................................................................................................................................5Limitation of study...........................................................................................................................6Components of regression................................................................................................................6Vector auto regressive model...........................................................................................................8Analysis of tables.............................................................................................................................8CONCLUSION .............................................................................................................................12REFERENCES .............................................................................................................................14INDEX OF TABLESTable 1: Regression statistics for GDP............................................................................................9Table 2: ANNOVA for GDP...........................................................................................................9Table 3: Regression for interest rate..............................................................................................10Table 4: ANNOVA table for interest rate......................................................................................11
Research introduction and overviewPresent research is carried out to understand extent to which monetary policy as a tool ofgovernment and central banks is effective in bringing changes ion the economic life cycle to thenation. It is has been observed most of the times that when economic turmoil comes in existencecentral banks make changes in their monetary policy in order to bring economy on track and tocontrol inflation rate (Starr, 2014). But physically any big change in economic cycle is notobserved. Even most of times changes are bring in the policy but in the market prices of goodsdoes not significantly change. Hence, for one it is very difficult to estimate the extent to whichmonetary policy is bringing change in the economic cycle of the nation. In this research everyattempt is made to identify and prove that monetary policy is playing decisive role in bringingchanges in the economic cycle of the nation (Armendáriz and Morduch, 2010). In this regardeconometric are used in the present study and technique of Vector auto regression model isapplied to the collected data. In this research, data of Spain GDP and interest rate is taken.Change in GDP is the symbol of economic cycle of the nation and due to this reason GDPfigures are taken in to this research. Apart from this central bank monetary policy indicatechange in interest rate by the central bank. Thus, in research relevant figures are taken and byusing both type of data Vector auto regression model is prepared (Habib, 2013). Hence, thisresearch certainly produce good results that will be used for deriving useful conclusions. Research typeThere are two types of research namely primary and secondary research. Primaryresearch refers to the data that is collected for the first time and are not available on any book,journal, magazine and website. Whereas, secondary data refers to the data that is alreadyavailable and collected from sources of information like book, journal, magazine and website. Itis very important to collect secondary data because by using this data researcher develop broadunderstanding about the at scenario. By reviewing information related to past mangers canestimate likely changes that currently may happen in the specific variable. On the basis of goodunderstanding of past conditions researcher get a direction in which he needs to conduct aresearch. Thus, it is very important for one to collect secondary data before conducting aresearch. In the present research data is collected from various websites and these sites arehighly reliable source of information (Jalles, 2010). Data from 2012 to 2016 is collected from
these websites and used for preparing a model for computing Vector auto regression analysis.This model is very helpful for the researchers because by using this tool managers andresearchers identify relationship between two variables and to what extent changes are observedin the single variable (Descriptive statistics using excel and stata, 2016.). Thus, it can be saidthat this statistical tool not only help in evaluating single variable but by using same we canidentify the extent to which one variable is depending on other for performance. Hence, it can besaid that this research is very helpful in identifying the extent to which economic cycle isaffected by the monetary policy of the government. Research approachIn order to conduct research quantitative approach is followed and under this econometricis prepared by the researcher. For preparing this metrics data of Spain GDP and interest rate istaken and various calculation are done as can be seen in the tables that are attached in the answerfile. Lag GDP and interest rate is computed in the table and difference between values of lagcolumn is calculated (Chaudhuri and Banerjee, 2010). This process is further carried out in caseof variables GDP and interest rate of central bank. After doing all calculation in the tableregression model is applied on raw data and calculated values. Under regression model values ofX axis and Y axis are taken as inputs and on this basis values of various components ofregression analysis table is computed by the researcher. In the present study secondary researchis also done and for this literature from various sources of information is reviewed by theresearcher. These sources of information were books, journals, magazines and websites as wellas newspapers. On the basis of evaluation of information available in these sources ofinformation literature review is prepared (Yin, 2013). Preparation of literature review to largeextent help in understanding past scenarios and impact of monetary policy on the economic cycleof the nation.Data collection methodIn order to collect data various websites are visited and data available on them arereviewed (Krueger and Casey, 2014). It is ensured that data is collected from the perfect websiteand there is very high reliability of the data that is collected from the specific website. In order toprepare literature review various sources of information are reviewed. Hence, it can be said thatdata is collected in appropriate way to conduct research.
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